The Department of Trade and Industry took the Committee through the amendments that had been effected by the NCOP to the Companies Bill, pointing out that all were of a technical nature, being little more than correction of grammar, spelling, or correction of references. The changes to Clauses 30, 70(b)(iii), 71(b), 185(b), 203 and the Third Schedule were detailed. There were no substantive questions and the Members agreed to approve the amendments to the Bill.
The Department then briefed the Committee on the Annual Report for 2007/08. It was agreed by the Committee that the Report would be presented but would not be interrogated in depth this year, in view of the shortage of time, and that this would rather stand over to the next Parliament. A detailed report was presented but the presenters concentrated on the achievements, challenges and budget. The Department was confident that
Members raised numerous concerns, not all of which were answered in this session, with the remainder standing over for further deliberation and explanations early in the sitting of the new Parliament next year. Questions were asked about the limited mention of direct foreign investment, the lack of foreign investment in the Industrial Development Zone at Richards Bay, and the benefits of the Doha round in which South Africa had participated, the fact that the Companies Bill was listed as amongst those Bills passed, whereas it was still in progress, bringing into question the accuracy of the report, and several questions and concerns were raised around the vacancy rate, the amounts still being paid to consultants, the use of interns, the challenges around staffing and how the vacancy rate was impacting upon service delivery. Other concerns related to comments by the Auditor General, the functioning of the National Lottery and agencies such as Small Enterprise Development Agency and Khula, including poor service by staff, lack of cooperation and coordination amongst various government departments and agencies, as also the municipalities. One Member suggested that a Joint Planning Commission would be useful. Certain quotas, including in the textile industry, were specifically questioned. Members expressed their disquiet that the communication by the Department was poor in both English and Afrikaans, with little attempt to use plain language and with a focus on English to the exclusion of other languages. Specific questions were directed to the export strategy, whether the Department cooperated with the Department of Foreign Affairs, and the massive exports of minerals. Members commented that the Broad Based Black Economic Empowerment did not seem to be promoting growth, that there was little evidence of the impact of the Industrial Development Zones, and were concerned about the lack of active engagement in rural areas.
Finally the Committee adopted minutes of previous meetings, as amended.
Companies Bill B61B-2008: Presentation of amendments proposed by NCOP: Department of Trade and Industry (dti)
Ms Zodwa Ntuli, Deputy Director General, Consumer and Corporate Regulations Division (CCRD), Department of Trade and Industry, stated that there were certain technical amendments that the NCOP had made to the Companies Bill.
Mr Strydom, Legal Adviser, Department of Trade and Industry, then reminded the Members that the Bill had a long history, including numerous public submissions made at the public hearings devoted to this Bill. After the Bill had been accepted as the B version there were then some further technical amendments, which were presented to the NCOP’s Select Committee on Economic and Foreign Affairs. He requested Members’ indulgence to consider these not in the form of a published Bill but rather a two-page document dated 17 October (see attached document). These were also listed in the Announcements, Tablings and Committee Reports of 17 October 2008. The Bill was of general application and if this Committee agreed to the amendments they would be incorporated into the Section 75 Bill.
The amendments were then detailed by Mr Strydom, reading from the attached document. He noted amendments to clauses 30, Clause 70(b)(iii), on pages 65 and 66, and to Clause 71(b), which deleted the phrase “non resident” and certain words. Clause 185(b) was deleted, and replaced with a new paragraph, reading: “a person designated by the Commissioner to perform a particular function of the Commission, is the certificate, notice, decision, determination, or ruling of the Commission with respect to that matter”. In Clause 203 the word “committee was replaced by “council”. In the third schedule, the words “Consequential amendments to Acts listed in Schedule 4” were to be substituted with “Amendments of Laws”.
On page 165, after line 2, the words “A, Close Corporations Act, 1984” were to be inserted, and on page 170 the incorrectly spelt “auditered” was to be substituted with “audited”.
On page 174, on line 1 the wording “9. Consequential Amendments to Acts listed in Schedule 5” was to be replaced with “B: Consequential Amendments to certain other Acts listed in Schedule 4”
Mr D Olifant (ANC) sought clarification on Clause 30, and Mr Strydom explained how it would read, by referring to the document.
Members had no further comment or questions, and agreed to accept the amendments unanimously.
The Chairperson formally read the Motion, and declared the Bill passed with the amendments.
Ms Ntuli thanked the Committee and its Members for their attention and assistance, and expressed the opinion that the legislative process had led to substantial learning on the part of the officials, who would be able to better their performance in future from the lessons learned.
The Chairperson too noted that the Members had benefited from the process, and extended his thanks to all who had participated in the process.
Department of Trade and Industry (dti) and Agencies: Annual Reports 2007/08
The Chairperson explained that normally the Department would present its report, followed by questions and comments by the Committee. The same process would apply for the Department’s agencies. However, this year the Committee was left with very little time in the Parliamentary programme, and so he noted that the Department and Agencies should table their respective Annual Reports, but that the interrogation of these should stand over until the next Parliament. This was not to be interpreted as setting a new precedent, but was occasioned merely because of the current schedule.
Mr Tshediso Matona, Director General, Department of Trade and Industry, advised that although the written presentation consisted of around 60 slides he would short circuit this, and instead present a consolidated report that concentrated on an overview of the challenges, achievements, and the budget analysis.
He noted that signs in the financial world all indicated an imminent global economic downturn, with the South African economy following a similar downturn, but he personally felt that this was not a prediction of a cataclysmic event. The problems with the irregular supply of electricity, the increase in interest rates, increasing inflation, and increasing food and fuel prices were leading to a decrease in business and consumer confidence, exacerbating the current account deficit and creating fiscal pressure. However, he felt that the economy was resilient and strong and that there would be favourable reactions to adverse conditions. Available figures, as set out in slide 4, confirmed this impression. It was noteworthy that exports grew by 24% in 2007, that investment (Gross Fixed Capital Formation) grew by 21 %, that unemployment fell to 23 %, and that real income per capita increased by 4%. He believed the direction of policy was well thought out. If it could be maintained through focus on stronger implementation of identified interventions and increased resourcing, this would contribute hugely to
He added that what was required, and what was being produced, were synergies and inter-dependencies within an integrated framework. He was of the opinion that the sum of the parts was working well together.
In the field of industrial development, the purpose of the dti was to provide leadership in the development of policies and strategies that promoted and fostered competitiveness, enterprise development, empowerment and equity in the economy. The dti had launched the National Industrial Policy Framework (NIPF), an Industrial Policy Action Plan (IPAP), had made progress with the finalisation of sector summits in the Chemical, Metals and Engineering activities which identified key action plans. In regard to forestry, there had been progress with forestation measures and downstream beneficiation and support in Kwazulu Natal (KZN) and the
The Film and Television rebate scheme had been revised to effect support to both local and foreign productions, and in the financial year under review, 25 productions to the value of R97, 3 million were assisted. The incentives for Co-operatives, which were now seen as a vehicle for job creation, were operational. The Industrial Development Zones (IDZs) had shown substantial progress in attracting investment, and over R5 billion had been committed. Under the Strategic Industrial Projects (SIP) 45 projects were approved up to 2005, when the scheme expired. The value of the investment was estimated at R28.7 billion, with 8 446 direct and 104 545 indirect jobs created. Twenty two of the approved projects with an investment of R10 billion had already been established. In the field of Critical Infrastructure Programme (CIP), seven projects were approved in 2007/8 with the qualifying investment of R1.3 billion, and the infrastructure investment at R9.5 billion. Finally, the Export and Investment Assistance (EMIA), which was designed to develop and increase potential exporters, had been finalised.
Mr Matona noted that the infrastructure required investment. The Support Programme for Industrial Innovation (SPII) had 74 projects valued at R306 million, of which 18% were female-run and 34% were Black Economic Empowerment (BEE) projects. The Technology and Human Resources for Industry Programme (THRIP) assisted 608 researchers, 2 054 students and 395 industry partners, of whom 38% were female and 54% were BEE. The introduction of cutting edge technology was very important. The South African National Accreditation System (SANAS), the South African Bureau of Standards, and the National Metrology Institute of South Africa (NEMISA) were major contributors in the area of standards, metrology and accreditation. In addition, Centres of Excellence had been established to increase manufacturing skills in aerospace, clothing and textiles, advanced engineering and other fields. A cluster initiative for the development of aerospace industry (called an aerospace village) had been established.
Mr Matona noted that funding approvals totaled R8.5 billion, of which R2.1 billion is for investment in other parts of Africa, to assist in the creation and retention of more than 33 000 direct jobs in South Africa and 1 900 in the remainder of Africa. Over 40% of the created jobs were in rural areas, with 61% being BEE, and seven of the provinces were represented. He set out examples of this in the fields of renewable energy, funding for a bio-ethanol plant in the
In the field of Sectoral Diversity the Biovac Institute had been established to restructure State vaccine assets, and create new vaccine production facilities, with exports to the rest of
With regard to trade, investment and exports, Mr Matona noted that the intended purpose was to promote economic development by working to build an equitable multilateral trading system that facilitated development; strengthened trade and investment links with key economies, and fostered African development, including regional and continental integration and development in line with NEPAD. The Department had participated effectively in the World Trade Organisation’s Doha Round and industrial tariff negotiations, aligned the South Africa / European Union (EU) Agreement with Southern African Development Community agreements (as listed), and he set out the status of other treaties and cooperation agreements. Key bilateral agreements included the introduction of clothing and textile quotas against the import surges from
Several further initiatives and actions were mentioned under the heading of broadening participation, including policies and strategies to promote enterprise growth, empowerment and equity in the economy, giving financial and non financial support through the financial assisters National Empowerment Fund (NEF), Khula, SAMAF and Small Enterprise Development Agency (SEDA). There had been implementation of codes of good practice for Broad Based Black Economic Empowerment. The Transformation Charters for AGRI-BEE, Forestry and Tourism had been gazetted. The fund for women, Isivande, had been set up. Various methods had been used to promote awareness of dti’s services.
Khula’s disbursements increased by 20% with concentration on small and women businesses; SAMAF funding commitments in all 9 provinces totalled R86 million. SEDA had set up four new branches, bringing the total to 43 branches, and had assisted 186 195 citizens.
In the legislative area, Mr Matona set out the major achievements, including regulations under the National Cooperatives Act, and introduction of the National Credit Act, changes to the South African National Accreditation System, finalisation of National Consumer Tribunal Rules, set up a new Board for the National Lotteries,
In respect of each piece of legislation, he detailed the numbers of inspectors or officials appointed, numbers of inspections or initiatives, workshops, and cases or complaints. He also described the amounts disbursed by the National Lotteries, the research projects, and the work done by the Competition Commission on the cartels. He noted that the research into the banking sector was done, and that the telecommunication industry and health care industry remained a focus.
Mr Matona then detailed that the purpose of the Administration and Co-ordination unit was to ensure efficient and effective co ordination. He detailed that the vacancy rate had been reduced to 18.6% by September 2008, that several Senior Management posts had been filled, and gave the figures for procurement. There had been good progress on disability and gender equity, improvement on turnaround times, reduction of fraud and strong corporate governance.
Mr Matona noted that there were still some challenges, which included the need to enhance the impact of the dti, to address the impact of economic conditions, the ageing building infrastructure of the South African Bureau of Standards, and the need to keep pace with advances in technology, transformation and compliance, and achieve improved inter-governmental co-ordination. He concluded that he was very satisfied with the activities and progress made by the dti in the past year, although he was conscious of the ongoing work still to be done, and noted his gratitude for the support of the Heads of the Agencies.
A member raised concerns about the global financial situation impacting upon the South African economy. He expressed concern that although there was mention about a 34% increase in incentive payments, there was little mention of Direct Foreign Investment (DFI). Further, he wanted to hear comments about the WTO Doha round that had taken place several years ago but which seemed to be bringing very few benefits to
A Member also noted his concerns about the staff vacancy rate.
Mr L Labuschagne (DA) commented that the dti was a large and difficult organisation to control. He noted that there were claims that the Companies Bill had been passed, yet only this morning had this Committee completed its work, so the legislative process was far away from being finalised. He wondered how much else in the Report was premature.
Mr Labuschagne was concerned about the challenges facing the dti and the lack of resources. He expressed concern that the choice of personnel might be based on racial classification profiles rather than on the basis of the best person for the job. He asked how many of the challenges were directly affected by the vacancies.
The Chairperson asked Mr Labuschagne to elaborate upon his references to racial classification.
Mr Labuschagne replied that he was not happy with the constant emphasis on racial categorization, not only by the dti, but by other Government departments and agencies. The country was supposed to be non racial in its outlook.
Mr Labuschagne was also concerned about the report and comments by the Auditor General on Page 110 of the Annual Report, that the 2007-2010 strategic plan did not include measurable objectives, expected outcomes, programme outputs, indicators and targets of the entity's programmes, as required by Treasury Regulation 5.2.3(d). On page 117 there was reference to the fact that under the Strategic Defence Package (SDP) three of the six obligors had reached maturity within this reporting period. On page 125 there was a report on disciplinary procedures taken against officials for failure to disclose their financial interests. He asked why these had not been completed, and how widespread was the problem of failure to disclose financial interests. He pointed out the reference on page 159 to the wasted expenditure, and wondered why this had not been recovered. On Page 176 there was reference to increasing capacity. He asked how many of those receiving bursaries would be returning to
Mr Labuschagne noted that the National Lottery had distributed R972 million, but he was aware of many complaints about the disbursement of funds, both for prizes and appropriations.
Mr Labuschagne noted that Khula was making a profit but he asked at what price this was being done.
Mr Labuschagne noted that action had been initiated against Tiger Foods, but he questioned why there had been delays.
Mr Labuschagne noted the increase in the number of branches of SEDA, but asked who had actually qualified for assistance from that Agency.
Mr D Dlali (ANC) expressed unhappiness about the fact that the Industrial Development Zone (IDZ) at
Mr Dlali also was concerned about the adverse comments by the Auditor General.
Mr Dlali pointed out, in regard to the 43 branches of SEDA, that he had recently been in the branch in Kokstad, whilst not revealing who he was, and for over half an hour he had stood waiting while the officials in the branch had been conducting private conversations over the telephone while ignoring their potential customers.
Mr Dlali noted the reference to First National Bank on Slide 32, but enquired about the other banks.
Mr Dlali questioned whether the human resources administration figures were correct.
Mr Dlali noted also that the Companies Bill was listed, on Slide 26, as having been finalised, and raised similar comments to those made by Mr Labuschagne.
Dr S Rasmeni (ANC) thanked the dti for all its efforts in assisting
Dr Rasmeni asked why there was seemingly a focus on acquiring PhD graduates who were good at “shuffling papers and producing reports” yet not so good at actually doing the physical work that was required.
Dr Rasmeni noticed the large numbers of companies and close corporations registered by the Companies and Intellectual Property Registration Office (CIPRO), and also the large number of liquidations, and he wondered whether this was not mere paper shuffling exercise.
Dr Rasmeni, similar to his colleagues, noted the claim of 43 branches, but asked what was actually being delivered, especially since SEDA did not appear to be proactive; at best their reports were insufficient, but at worst could be regarded as misleading. He also commented that the NEF was not apparently active in the
Ms N Khunou (ANC) expressed concern about the high vacancy rate, especially given the high unemployment rate in
Ms Khunou was also concerned that the road shows and other communication activities were not achieving the desired results.
Dr P Rabie (DA) expressed concern about the notorious delays by the Estate Agents Board in providing renewed Fidelity Fund Certificates and he wondered to what extent the downturn in the property industry was not occasioned by inefficiencies in that body.
Dr Rabie asked, with regard to the quotas and the Chinese textiles, whether these were not doing more harm than the intended good.
Dr Rabie was also concerned about the MIDP, saying that in a global downturn the demand for South-African assembled motor vehicles would decline, leading to unemployment unless the dti concluded the new MIDP quickly.
Mr S Njikelana (ANC) extended his congratulations to the dti but added that he had a few concerns. His first concern was around the philosophy that accompanied choice of language. Although the Constitution recognised 11 languages, English was used primarily, but often it was English that could not easily be understood by the ordinary person. He asked that in future the dti must try to make its communication more user-friendly.
Mr Njikelana stated that the report by the dti contained many references to industry or industrial activity, which he regarded as something of a weakness. The “Big Five” financial houses of Khula, SEDA, Khula and the others were constantly criticized for their lack of, or very tardy service delivery and poor accountability of personnel.
Mr Njikelana was also concerned about the apparent lack of co-operation or communication between the dti, National Treasury and other departments; he even had the impression that each department seemed to be doing its utmost to frustrate rather than co-operate with the other departments, which would be to the benefit of
Mr Njikelana noted that the broad based black economic empowerment (BBBEE) appeared, from the reports, to be up to date and on track. However, in view of the global economic downturn, he questioned how many of the BBBEE schemes were and would continue to be sustainable.
Mr Njikelana noted the reference to
Mr Njikelana asked the nature of the vacancies at managerial level, and the impact of those vacancies upon service delivery. He also enquired to what extent the dti was complying with employment equity, and finally how the Joint Initiative for Priority Skills Acquisition (JIPSA) had impacted upon the vacancy rate.
Prof B Turok (ANC) also remarked that the dti was a complex department and its reporting was not straightforward.
Prof Turok commented that other Members had raised queries on the international approach. He wished to go further and questioned the lack of a generalised approach from the dti and the other South African departments. He felt that each department was unilaterally playing a solo role, instead of all the departments playing together as would an orchestra under the baton of one conductor. The inter and intra departmental rivalry and one-upmanship acted to the detriment of the country. He could not emphasize enough the necessity for a joint planning approach, and suggested that a Joint Planning Commission would be advantageous. He was opposed to leaving it all to the nebulous and omnipotent "market", which frequently did not have the best interests of
Prof Turok questioned the incentive training, asking who was benefiting from this.
Prof Turok also noted that BBBEE seemed not to be promoting growth, and he reminded Members that there was a difference between growth and development.
Prof Turok asked the dti to specify who was receiving the bulk of their orders for goods and services? He suggested that it was disingenuous to relate that so many formerly-deprived individuals were now rendering services or supplying goods to the dti, if there was a small number of small providers, and he suggested that an index of percentages would be helpful in clarifying the picture. He amplified that the international definition of “employment” was one hour of paid employment per week, which would put a person washing cars at a parking lot into the category of the employed, which was nonsensical.
A Member asked what effective impact the IDZs were having on developing the South African economy, and asked for more information to keep people hopeful. He questioned whether the dti was really concerned about fighting poverty or developing a policy to end poverty, and if so, what its plans were. He note the reference to the rollout of services and developments in
Mr D Olifant associated himself with the concerns raised by Ms Khunou about an integrated distribution of information and knowledge. He too echoed Mr Njikelana’s concerns about the predominance of English, but said that Mr Njikelana’s comments about the dti’s use of English applied equally to their use of Afrikaans. Although Afrikaans was his mother tongue, he found dti’s communication in Afrikaans to be “near-incomprehensible” as it was not using “plain
Mr Olifant commented that the dti did not seem to active enough in the rural areas. Its announcements that a project was under way in a “rural” area often tended to be areas close to major centres, and not in the real rural areas such as Springbok or Pofadder or Nkandla. Any mega-projects with the aid of Industrial Development Corporation (IDC) were not based in the rural areas, but were merely attracting unemployed people from those areas to the urban areas, where they would eventually become urban-unemployed. He appealed for a better focus on the siting of the developments.
Mr Matona gave a general overview in his responses to the various questions posed.
He firstly noted that Prof Turok had made out a very eloquent case for his point of view. He conceded that fundamentally the problem was based on co-operation and co-ordination between departments, but he added that this was a highly complex issue and could not be viewed simplistically from only one side, but must be seen holistically. He conceded that a Planning Commission was essential. However, he could only, from his side, create an intra-departmental planning commission, and even here he would encounter opposition from entrenched interests. He added that some incentives rather than sanctions were required. He cited the Department of Health, which was forever requiring supplies of medicines, but which never cooperated with dti to establish whether these medicines could be acquired from South African sources, or could be sourced more cheaply or faster with the intervention of the dti. However, he added that it was rather invidious to focus on this department, for all others had similar approaches.
However, with regard to the comments about the municipalities, he pointed out that municipalities did not do economic work and could tend to frustrate the dti if they regarded any development as impinging upon their entrenched positions. The Spatial Development Initiatives (SDIs) were such an example.
Mr Matona also conceded that responsiveness by the Departmental officials was a huge problem, but this too did not apply only to the dti. He ventured to suggest that if the Members conducted an experiment by telephoning their own offices without identifying themselves the response by their own staff would doubtless leave much to be desired. Such a poor working culture needed to be revolutionised. People, rather than governments, departments or agencies, delivered the service, and the attitude of service and a desire to serve were difficult to inculcate. However, there had been significant changes in CIPRO and he was confident that this approach would spread.
Mr Matona noted that he had to impose higher standards and also account to SCOPA. With regard to purchase and payment by the dti, Mr Matona said that the PFMA was posing a huge constraint.
Mr Matona noted that the cooperatives were encountering problems in complying with the PFMA as well. While he had no problem with the philosophy of the PMFA, the need to maintain the highest standards of corporate governance tended to be a hindrance to free development.
Mr Matona said, in regard to the various questions around personnel, that most vacancies were in the lower echelons, and salaries and wages posed a challenge. He noted that recently one of the Competition Commissioners had left to join another entity; this person had not actively wanted to leave but had been working in an “acting” position for two years without his position having been finalised, and had left because he could obtain a higher salary and security of tenure elsewhere. Although the dti was running a system of interns, the numbers were too low to make a significant impact on the vacancy levels. He admitted that he was using consultants even in his own office. However the bill for consultants had dropped to R44 million in this year, from R76 million in the previous year, and was falling further. In regard to the interns, he said that the Bursars were required to serve the dti for a period equivalent to the length of their study periods and that they were not merely allowed to leave and secure better remunerated positions elsewhere in South Africa or the world.
Mr Matona conceded that road shows, media releases and other written communication could be improved. However, the reality was that he had to work with whatever resources were available. English tended to be preferred by default rather than active design.
Mr Matona noted, in regard to the questions about the international matters, that there were established interests in relation to
Mr Matona commented upon Mr Dlali’s very negative impression about the length of time for bilateral trade negotiations. He stated that this could not always be blamed on
Addressing members’ calls and questions around the activity in the rural areas, Mr Matona conceded that this was important, but added that there were a host of factors to be taken into account in making a decision. Often there would be a preponderance of positives to the urban or semi-urban situation, at the expense of far-flung rural areas.
Mr Matona finally commented that trade and its development was not merely concerned with BB BEE but that the interests of strategy and that of the role players, especially that of the money sources, were as important.
Members had some general discussions about trade and the economy. However, they agreed that time constraints did not allow for an in-depth discussion of the Annual Report of the dti or of its agencies. This must stand over to the next Parliament, as hopefully there would be continuity as some of the members would be likely to return.
The Chairperson, in response to a direct question, ruled that the reports by the Agencies could be made public
Committee Business: Adoption of Minutes
The Chairperson asked for comment on any of the Minutes circulated to Members.
A Member noted that the apology he had tendered for one meeting was not reflected. The Chairperson undertook to have the Committee Secretary investigate.
Mr S Njikelana (ANC) drew attention to the fact that the Minutes of 8 August 2008 reflected that the Chairperson had moved for adoption, but this should have read Mr Oliphant.
Members agreed to accept the Minutes, as amended.
The meeting was adjourned.
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